The credit crunch might have dented banks' optimism about market conditions, but a new study suggests their investment in IT is set to soar.
The latest survey produced by the Confederation of British Industry and Pricewaterhouse- Coopers paints a bleak picture of the financial services industry as a whole, with optimism plummeting to levels only previously seen in the depths of 1998 and 2003.
Despite the general malaise, the same survey suggests investment in IT is set to remain buoyant, with banks looking to increase efficiency rather than expand capacity. On balance, 76% of fund managers plan to increase investment in IT in the next three months, and 67% in the life insurance sector plan to increase technology spending over the next three months.
IT recruiters confirm banks are still hiring, but say they're becoming more fussy about who they go for. Dave Pye, chief executive of Highams Recruitment, says: "Last year there was a scramble for talent, because firms were spending a lot on IT. Now, they are being more savvy and demanding specific financial experience - at both the senior level and developer level."
Meanwhile, there's a danger that the new emphasis on efficiency will see a renewed commitment to off-shoring. However, the recruiters we spoke to said this isn't a foregone conclusion.
"While some firms are looking to cut costs by off-shoring, others are near-shoring or bringing projects back on-shore. There is an increased appetite for project managers with the right mix of experience in these areas," says James Parker, manager of technology and consulting at recruiters Robert Walters.
Pye agrees: "Firms may have saved money by outsourcing, but they still need people for what we call face-off skills. The need for project managers and business analysts to oversee these operations is massive."
IT spending predictions in the UK are in stark contrast to those in the US. In November, John Chambers, chief executive of Cisco Systems, said it had experienced "softness" from US customers, as a result of a fall-off in orders from financial services firms.
Meanwhile, the technology stocks have slumped in recent weeks. The Nasdaq fell 3.7% on Friday, after a 10% fall since October. Anne Mulcahy, chairman and chief executive of Xerox, said in the Financial Times that market scepticism in the US had led to understandable belt-tightening amongst financial services firms on IT investment.